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Sunday, 15 October 2017

Whether composite application for rejection of plaint and return of plaint is tenable?

It is a trite law that plaint could be returnedat any stage of the suit to be presented to theCourt in which the suit should have beeninstituted, if the Court finds that the Court didnot have the territorial or pecuniaryjurisdiction to try the suit. There are noconditions or circumstances specified in Rule 10for return of the plaint, as specified forrejection of the plaint under Rule 11 of OrderVII. Though not specifically stated, Rule 11casts duty on the Court to reject the plaint, ifthe case falls under any of the clauses mentionedtherein. If both the provisions are perusedclosely, it transpires that both are independentprovisions available to the defendant in thesuit. Where the plaint does not disclose a causeof action, it is liable to be rejected underClause (a) of Rule 11 and could not be returnedunder Rule 10. Similarly, where the reliefclaimed is not valued properly or if properlyvalued, but the plaint is written upon paperinsufficiently stamped, and the plaintiff onbeing required by the Court to correct thevaluation or to submit the requisite stamp paperas the case may be within the time fixed by theCourt fails to do so, the plaint is liable to berejected under Clause (b) or Clause (c), as thecase may be, of Rule 11 and could not be returned

under Rule 10. Similarly, where the suit appearsfrom the statement made in the plaint to bebarred under any law, then also the plaint isliable to be rejected Clause (d) of under Rule 11and could not be returned under Rule 10. Thus, aduty is cast on the Court to reject the plaintwhen the same is hit by any of the infirmitiesprovided in the clauses of Rule 11 even withoutthe intervention of the defendant. Whereas theplaint could be returned under Rule 10 only whenthe Court comes to the conclusion at any stageof the suit that the plaint was not presented tothe Court having jurisdiction to try the suit,and under the circumstances, it has to bereturned to be presented to the Court in whichthe suit should have been instituted. Thus, onthe plain reading of the said provisions ascontained in Rule 10 and 11 of Order VII, itclearly emerges that they are mutually exclusiveto each other, and the reliefs could not beprayed for alternatively, either under Rule 10 orunder Rule 11 as sought to be prayed for in theinstant case by the applicant – defendant beforethe trial Court. The Court, therefore, is theopinion that such a composite application underRule 10 and Rule 11 of Order VII as such wouldnot be maintainable. {PARA 6}IN THE HIGH COURT OF GUJARAT AT AHMEDABADCIVIL REVISION APPLICATION NO. 10 of 2015

H D F C BANK LIMITED.VASHAPURA MINECHEM LIMITED..

CORAM: MS.JUSTICE BELA M. TRIVEDIDate : 13/10/2017

1. The applicant Bank (original defendant) by way ofthe present Civil Revision Application filedunder Section 115 of CPC has challenged the orderdated 15.12.2014 passed by the Principal Sr.Civil Judge, Jamkhambhaliya (hereinafter referredto as "the trial Court”) below Exh.9 in SpecialCivil Suit No.72 of 2012, whereby the trial Courthas rejected the said application filed by theapplicant under Order VII Rule 10 and 11 readwith Section 151 of CPC, seeking return and/orrejection of the plaint. With the consent of thelearned Advocates for the parties, the CivilRevision Application was heard finally at theadmission stage.2. The factual matrix in nutshell giving rise to thepresent Civil Revision Application may be statedas under:-2(i) The respondent (original plaintiff) hasfiled the suit being Special Civil Suit No.72 of2012 against the applicant – defendant seekingvarious reliefs of declaration and permanentinjunction as stated in paragraph 46 of theplaint, which read as under:-“(a) For a declaration that the MasterAgreement dated 15th October 2007 andall the four Transactions thereunderbearing reference nos.69026HM to69145HM, 73359HM to 73360HM, 73773HM to73774HM and 74217HM to 74218HM areillegal, void ab initio andunenforceable; (b) For a permanent order of injunction ofthis Hon’ble Court restraining theDefendant, from acting under and/or infurtherance of the Master agreementdated 15th October 2007 and Transactionsthereunder bearing reference nos.69026HMto 69145HM, 73359HM to 73360HM, 73773HMto 73774HM and 74217HM to 74218HM in anymanner whatsoever; (c) For a declaration that the Term LoanAgreement dated 13th August 2009 isillegal, null, void and unenforceable; (d) For a permanent order of injunction ofthis Hon’ble Court restraining theDefendant, from acting under and/or infurtherance of the Term Loan Agreementdated 13th August 2009 in any mannerwhatsoever; (e) For recovery of Rs.54,68,57,468/­ paidto the Defendant pursuant to the MasterAgreement dated 15th October 2007 andthe said Transactions and an interest atthe rate of 18% per annum thereon; (f) Pending the hearing and final disposalof the present suit, for a temporaryorder and injunction of this Hon’bleCourt staying all proceedings initiatedby the Defendant before the DebtsRecovery Tribunal­ll, Mumbai in OriginalApplication No.29 of 2011, OriginalApplication No.30 of 2011 and OriginalApplication No.31 of 2011;(g) Pending the hearing and final disposalof the present suit, for a temporaryorder and injunction of this Hon’bleCourt restraining the Defendant, itsManaging Directors, Directors, officers,agents and servants from continuing withand/or initiating any fresh proceedingsagainst the Plaintiff in the DebtsRecovery Tribunal or any otherCourt/Tribunal/Forum for any alleged

claims under Master Agreement dated 15thOctober 2007, the said Transactionsthereunder and/or the Term LoanAgreement dated 13th August 2009;(h) Pending the hearing and final disposalof the present suit for a temporaryorder and injunction of this Hon’bleCourt restraining the Defendant, itsManaging Directors, Directors, officers,agents and servants from acting underand/or in pursuance of and/or infurtherance thereto, or making anydemands out of or in connection withsaid Master Agreement dated 15th October2007 and/or the said Transactionsthereunder; (i) Pending the hearing and final disposalof the present suit for a temporaryorder and injunction of this Hon’bleCourt restraining the Defendant, itsManaging Directors, Directors, officers,agents and servants from acting underand/or in pursuance of and/or infurtherance thereto or making anydemands out of or in connection with theTerm Loan Agreement dated 13th August2009 including adjustments and/orappropriating any sums and/or receivingand/or realizing any sums for recoveryof the amounts allegedly duethereunder.” 2(ii) It has been alleged in the plaintinter alia that the plaintiff is an exporterof bauxite and bentonite, having its officesat various places in India, including atMumbai and Khambhaliya. The defendant is abanking company incorporated under the IndianLaws, with whom the plaintiff had bankingrelationship since 2007. Since the plaintiffwas an exporter of minerals, it was

constantly exposed to the risk arising out ofthe fluctuation in the exchange rate offoreign currency. Hence, considering therecommendation of the defendant Bank andconsidering the fact that export of bauxitewould increase in future, the plaintiff inorder to protect itself against the risk ofdepreciation of the dollar, which wouldimpact the business profit, agreed to enterinto a Master Agreement to hedge the foreigncurrency risks arising out of the business ofexport of bauxite. The Master agreementcalled “International Swaps and DerivativesAssociation Master Agreement” was enteredinto between the parties on 15th October,2007 and the same was intended to be aforeign exchange derivative transactions inthe nature of foreign currency rupee optionbetween the parties, wherein the plaintiffwas to sell USD and buy INR from thedefendant at a predetermined price. At theend of every month, if the dollar rate wasbelow the predetermined rate, the differencebetween the predetermined rate and theprevalent rate was payable by the defendantto the plaintiff, whereas if the prevailingdollar rate was more than the predeterminedrate, then the plaintiff was liable to paydouble the difference to the defendant.Under the said Master agreement, theplaintiff and the defendant had entered into

four transactions in the nature of foreigncurrency rupee options bearing ReferenceNos.69026HM to 69145HM, 73359HM to 73360HM,73773HM to 73774HM and 74217HM to 74218HM.The said four transactions put togetherinvolved a notional of 150 million dollars orthe equivalent of around Rs.592 Cr., at theprevailing spot rates.2(iii) It has been further averred in theplaint that apart from the inherent features,which make the transactions illegal andopposed to public policy, the overallexposure under such transactions of theplaintiff patently exceeded the permissiblemaximum limit based on the past performanceand/or the receivables pending from itscontracts. The defendant was aware of othersimilar contracts that the plaintiff hadentered into with other Banks on account ofthe said risks in the mining and exportbusiness of the plaintiff, and yet thedefendant did not conduct the activity of duediligence. The plaintiff did not realizethat the defendant had in gross breach oftheir fiduciary duty, on the basis ofmisrepresentations, fraudulently induced theplaintiff to enter into the saidtransactions, which resulted in losses to theplaintiff and gross profits to the defendant.As per the Reserve Bank of India (“RBI” forshort) and Foreign Exchange Management Act

(“FEMA” for short) guidelines/circulars theonus was upon the defendant Bank to ensurethat the plaintiff had understood the risksassociated with the transactions and toensure that the transactions were consistentwith the plaintiff’s business, financialoperations, skills and risks, however, nosuch exercise was carried out by thedefendant. The plaintiff was never appraisedof the fact that the Master agreement and thesaid transactions were in fact a wager withinthe meaning of Section 30 of the IndianContract Act. The defendant being a Bank ofgood repute and supposedly excellentservices was in a position to exercise undueinfluence over and dominate the will of theplaintiff company, which had no expertise orskill or adequate knowledge in the field offoreign exchange management. The said Masteragreement and the said transactions,therefore, were voidable at the instance ofthe plaintiff under Sections 17 and 18 of theIndian Contract Act and void ab initio underSection 23 of the Indian Contract Act.2(iv) It has been further averred that inor around June 2009 the defendant claimed anddemanded a sum of Rs.22 Cr., approximately,which the plaintiff was made liable to payunder the said transactions. As theplaintiff was not in a position to pay thesaid amount, the defendant further misled the

plaintiff by suggesting that they would granta Term loan to the plaintiff of an equivalentamount. The plaintiff having no other choiceborrowed money from the market to makepayment against the said alleged debt andmade payment of Rs.22 Cr., to the defendant,and in return the defendant released a sum ofRs.25 Cr., under the guise of Term loan forthe purpose of partial reimbursement ofcapital expenditure incurred for setting upKaolin Project at Village Melakulam, TalukaTrivandrum, District Trivandrum, Kerala. Inthis regard, Term loan agreement dated13.8.2009 was executed between the parties.2(v) It is further case of the plaintiff thatin early 2010, the plaintiff realizing theillegality of the Master agreement and thetransactions thereunder, stopped makingfurther payments under the said contracts,and therefore, various demands raised of intocrores of rupees came to be made by thedefendant from the plaintiff as per theletters dated 21.10.2010, 9.12.2010,14.1.2011 and 29.6.2012. The defendant byits letter dated 19.4.2011 demandedRs.26,62,33,451.20 being alleged dues arisingout of the Term loan along with the interestthereon. The cheques that were issued by theplaintiff to the defendant by way ofcollateral security for the Term loan came tobe dishonoured by the banks for which the

defendant had filed various criminalcomplaints against the plaintiff underSection 138 of the Negotiable Instrument Act(hereinafter referred to as "NI Act”).According to the plaintiff an article waspublished in the daily newspaper the Times ofIndia in April 2011 stating that the RBI hadfined 19 banks for violating its guidelineson derivatives. The defendant Bank wasamongst the said banks, which was alsopenalized by the RBI.2(vi) It has been further stated in theplaint that the plaintiff was willing toreturn the amount of Rs.55,52,500/- gained bythe plaintiff under the said transactions, tothe defendant. However, the plaintiff hadpaid the amount of Rs.54,68,57,468/- underthe said transactions, which the plaintiffwas seeking to recover by way of the presentsuit.2(vii) As regards the jurisdiction of thetrial Court, it has been stated in the plaintthat the cause of action had partly arisen inKhambhaliya inasmuch as the authorizedsignatory of the plaintiff had signed andexecuted the Master agreement in Khambhaliyaand the factory of the plaintiff was alsosituated in Khamabhaliya, and therefore, themajor export business of bauxite by theplaintiff was conducted from Khambhaliya.

2(viii) It has been further stated that thedefendant by way of original applicationNos.29, 30, and 31 of 2011 had filedproceedings against the plaintiff before theDebts Recovery Tribunal (hereinafter referredto as "the DRT”) and had also filed Misc.Applications in the said originalapplications seeking interim reliefs forrestraining the plaintiff from alienating orcreating third party rights in Kaolin landproperty of the plaintiff. Since theplaintiff had no intention of parting awaywith any of the suit properties, thePresiding Officer of the DRT had disposed ofthe said Misc. Applications upon thestatement made by the plaintiff in thatregard.2(ix) It is further stated that since theplaintiff had suffered enormous losses, ithad to make a reference to the Board ofIndustrial and Financial Reconstruction(hereinafter referred to as "the BIFR”) videthe application dated 31.5.2011, which wasregistered as Case No.34 of 2011 by the BIFR.In the said case of the plaintiff, the BIFRon 2.11.2011 passed the order inter aliastating that “the HDFC Bank was allowed toapproach the competent Court forcrystallization of their dues and that theyshall approach the Board whenever their duesare crystallized. Till then, they will not

enforce the recovery of their dues from thecompany, as agreed by them in the hearing.”According to the plaintiff, despite the saidorder passed by the BIFR, the defendant filedinterim applications in the originalapplications in the DRT on or around1.12.2011 seeking the stay on the furtherhearing of the original applications to bevacated, and the Presiding Officer of the DRTallowed the said interim applications videthe order dated 17.1.2012 directing that thefurther hearing of the original applicationswould proceed in accordance with law and thatthe recovery certificate, if issued, wouldnot be enforced without the permission of theBIFR. Being aggrieved by the said order, theplaintiff filed writ petitions before theBombay High Court, which came to be dismissedby the order dated 26.11.2012. The plaintiffthereafter filed the present suit before thetrial Court on 24.12.2012 seeking the reliefsas stated herein above.2(x) The present applicant – originaldefendant submitted the application at Exh.9under Order VII Rule 10 and 11 read withSection 151 of CPC seeking to return and/orreject the plaint filed in the suit mainly onthe ground that the trial Court did not havethe jurisdiction to entertain the suit, inview of the ISDA Master agreement and theTerm loan agreement, as also Section 20 of

CPC. The plaint was also sought to berejected on the ground that it was barred bylaw of limitation, was barred by provisionscontained in the Recovery of Debts Due toBanks and Financial Institutions Act, 1993,barred by the provisions contained in Section41(b) and 41(h) of the Specific Relief Act,1963, barred by Section 13 of the Securityand Reconstruction of Financial Assets andEnforcement of Security and Interest Act etc.The plaint was also sought to be rejected onthe ground that it did not disclose any causeof action, and that the suit was a mala fideattempt on the part of the plaintiff to avoidand delay the payment of the amounts that hadfallen due to the defendant and was a grossabuse of Court. The said application hasbeen rejected by the trial Court, againstwhich the present Civil Revision Applicationhas been filed.3. The learned Sr. Advocate Mr.Mihir Thakore for theapplicant Bank assailing the impugned orderpassed by the trial Court, and relying upon thegrounds agitated in the application filed by theapplicant – original defendant seekingreturn/rejection of the plaint submitted that thetrial Court had failed to appreciate that thetrial Court did not have the territorialjurisdiction to entertain the suit in view of theprovisions of the Term loan agreement dated13.8.2009 read with Section 20 of CPC, and

therefore, the plaint was liable to be returnedfor being presented to the competent Court havingjurisdiction. Referring to the documents annexedto the plaint, he implored that Master agreementand the Term loan agreement having been executedand signed at Mumbai and all other legalproceedings having also been initiated andpending on the same subject matter, before theCourts/Tribunals at Mumbai, the trial Court atKhambhaliya did not have the jurisdiction toentertain the suit. In the alternative, hesubmitted that the plaint was liable to berejected mainly under Clause (a) of Rule 11,Order VII as it did not disclose any cause ofaction, and was filed with mala fide intention,misusing the process of law to avoid and/or delaythe payment of the amounts that had fallen due tothe defendant Bank. Mr.Thakore pressing intoservice the provisions contained in Sections 17and 18 of the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993 (hereinafterreferred to as "the RDDBFI Act”) submitted thatthe Debts Recovery Tribunal would have theexclusive jurisdiction in the matter of recoveryof debts and in the instant case the defendant –Bank has already initiated the recoveryproceedings before the DRT-II, Mumbai and theissues raised in the plaint are directly andsubstantially the issues before the DRT in therecovery proceedings initiated by the defendant.Reliance is placed on the decision of the Supreme

Court in case of I.T.C. Limited Vs. DebtsRecovery Appellate Tribunal & Ors., reported inAIR 1998 SC 634 to submit that in absence ofvalid cause of action shown in the plaint, thesuit was liable to be rejected under Order VIIRule 11 of CPC. He has also relied upon thedecision of Delhi High Court in case of RadnikExports Vs. Standard Chartered Bank, reported in(2014) DLT 436. Pressing into service theprovisions contained in the Specific Relief Act,more particularly Section 41(b) and Section 41(h)thereof, Mr.Thakore has submitted that theprayers contained in the suit could not begranted as per the said provisions. Mr.Thakorealso submitted that the suit containing theprayer seeking injunction against the defendantBank from enforcing the securities available withthe defendant Bank was also barred under Section34 of the Securitisation and Reconstruction ofFinancial Assets and Enforcement of SecurityInterest Act, 2002 (hereinafter referred to as'SARFAESI Act'). According to Mr.Thakore, thesuit is even otherwise vexatious and filed withulterior motive abusing the process of law, andtherefore also, was liable to be rejected in viewof the observations made by the Supreme Court incase of T. Arvindam Vs. T. V. Satyapal,reported in (1977) 4 SCC 467.4. Per contra, the learned Sr. Advocate Mr.MihirJoshi for the respondent - plaintiff raisingpreliminary objection with regard to the very

maintainability of the revision applicationsubmitted that the order rejecting theapplication of the defendant seeking return ofthe plaint under Order VII Rule 10 could not besaid to be an order finally disposing of the suitand the revision application would not bemaintainable in view of the proviso to Section115 of CPC. In this regard he has relied uponthe decision of this Court in case of Vimal Coop.Housing Society Ltd. Vs. RajendrakumarShankerbhai Bhagiya, reported in 2003(2) GLH 58.Mr.Joshi has also relied upon the decision ofthis Court in case of Patel Enterprise & Anr. Vs.Gujarat Tea Depot Company & Anr., decided on17.7.2017 to submit that the compositeapplication under Rule 10 and 11 of Order VIIfiled by the applicant before the trial Court wasalso not maintainable. As regards the rejectionof the plaint under Order VII Rule 11, Mr.Joshihas relied upon the latest decision of theSupreme Court in case of Kuldeep Singh PathaniaVs. Bikram Singh Jaryal, reported in (2017) 5SCC 345, to submit that the plaint can not berejected if the plaint discloses the cause ofaction and that the cause of action has to begathered on the basis of the averments made inthe plaint. Merely because the Court is of theopinion that the plaintiff may not succeed in thesuit can not be a ground for rejection of theplaint. Mr.Joshi has also relied upon thedecision of the Supreme Court in case of Sopan

Sukhdeo Sable and Ors. Vs. Assistant CharityCommissioner and Ors., reported in (2004) 3 SCC137 and in case of Mayar (H.K.) Ltd. and Ors. Vs.Owners and Parties, Vessel M. V. Fortune Express& Ors., reported AIR 2006 SC 1828 and submittedthat the averments made in the plaint as a wholehave to be seen to find out whether clause (d) ofRule 11 of Order VII was applicable. Accordingto him, the trial Court having rightly passed theorder rejecting the application of the defendantBank, and this Court having limited jurisdictionunder Section 115 of CPC may not interfere withthe same in view of the decision of the SupremeCourt in case of Hindustan Petroleum CorporationLimited Vs. Dilbahar Singh, reported in 2014 (9)SCC 78.5. In response to the preliminary objection raisedby the learned Sr. Advocate Mr.Mihir Joshi asregards the maintainability of the compositeapplication under Rule 10 and 11 of Order VII ofCPC filed by the applicant – defendant before thetrial Court, the learned Sr. Advocate Mr.MihirThakore has submitted that the applicants hadmade alternative prayers for return of the plaintunder Rule 10 and rejection of the plaint underRule 11 for the grounds stated therein,nonetheless if the Court is of the opinion thatsuch a composite application with alternativeprayers was not maintainable, he would not pressfor the return of the plaint under Rule 10 andthe present revision application be treated as

having been filed against the order rejecting theapplication filed by the applicant under Rule 11of Order VII of CPC.6. It is a trite law that plaint could be returnedat any stage of the suit to be presented to theCourt in which the suit should have beeninstituted, if the Court finds that the Court didnot have the territorial or pecuniaryjurisdiction to try the suit. There are noconditions or circumstances specified in Rule 10for return of the plaint, as specified forrejection of the plaint under Rule 11 of OrderVII. Though not specifically stated, Rule 11casts duty on the Court to reject the plaint, ifthe case falls under any of the clauses mentionedtherein. If both the provisions are perusedclosely, it transpires that both are independentprovisions available to the defendant in thesuit. Where the plaint does not disclose a causeof action, it is liable to be rejected underClause (a) of Rule 11 and could not be returnedunder Rule 10. Similarly, where the reliefclaimed is not valued properly or if properlyvalued, but the plaint is written upon paperinsufficiently stamped, and the plaintiff onbeing required by the Court to correct thevaluation or to submit the requisite stamp paperas the case may be within the time fixed by theCourt fails to do so, the plaint is liable to berejected under Clause (b) or Clause (c), as thecase may be, of Rule 11 and could not be returned

under Rule 10. Similarly, where the suit appearsfrom the statement made in the plaint to bebarred under any law, then also the plaint isliable to be rejected Clause (d) of under Rule 11and could not be returned under Rule 10. Thus, aduty is cast on the Court to reject the plaintwhen the same is hit by any of the infirmitiesprovided in the clauses of Rule 11 even withoutthe intervention of the defendant. Whereas theplaint could be returned under Rule 10 only whenthe Court comes to the conclusion at any stageof the suit that the plaint was not presented tothe Court having jurisdiction to try the suit,and under the circumstances, it has to bereturned to be presented to the Court in whichthe suit should have been instituted. Thus, onthe plain reading of the said provisions ascontained in Rule 10 and 11 of Order VII, itclearly emerges that they are mutually exclusiveto each other, and the reliefs could not beprayed for alternatively, either under Rule 10 orunder Rule 11 as sought to be prayed for in theinstant case by the applicant – defendant beforethe trial Court. The Court, therefore, is theopinion that such a composite application underRule 10 and Rule 11 of Order VII as such wouldnot be maintainable. In any case, consideringthe submission of Mr.Thakore, the presentrevision application is treated as having beenfiled against the order passed by the trial Courtrejecting the application for rejection of the

plaint under Rule 11 of Order VII of CPC.7. It is needless to say that the law as regards therejection of plaint under Order VII Rule 11 onthe ground of non-disclosure of cause of actionunder Clause (a) and on the ground of the suitbeing barred by law as contemplated in Clause (d)is well settled. The Supreme Court in case ofSopan Sukhdeo Sable and Ors. Vs. AssistantCharity Commissioner and Ors. (supra) whilelaying down the spectrum of Order VII Rule 11 inthe legal ambit has reiterated the earlierposition laid down in various judgements whichmay be reproduced as under:-“ 10. In Saleem Bhai and Ors. v. State ofMaharashtra and Ors., it was held withreference to Order VII Rule 11 of the Codethat the relevant facts which need to belooked into for deciding an applicationthereunder are the averments in the plaint.The trial Court can exercise the power atany stage of the suit ­ before registeringthe plaint or after issuing summons to thedefendant at any time before the conclusionof the trial. For the purposes of decidingan application under clauses (a) and (d) ofOrder VII Rule 11 of the Code, the avermentsin the plaint are the germane; the pleastaken by the defendant in the writtenstatement would be wholly irrelevant at thatstage. 11. In I.T.C. Ltd. v. Debts RecoveryAppellate Tribunal and Ors., it was heldthat the basic question to be decided whiledealing with an application filed underOrder VII Rule 11 of the Code is whether areal cause of action has been set out in theplaint or something purely illusory has been

stated with a view to get out of Order VIIRule 11 of the Code.12. The trial Court must remember that if ona meaningful and not formal reading of theplaint it is manifestly vexatious andmeritless in the sense of not disclosing aclear right to sue, it should exercise thepower under Order VII Rule 11 of the Codetaking care to see that the ground mentionedtherein is fulfilled. If clever drafting hascreated the illusion of a cause of action,it has to be nipped in the bud at the firsthearing by examining the party searchinglyunder Order X of the Code.13. It is trite law that not any particularplea has to be considered, and the wholeplaint has to be read. As was observed bythis Court in Roop Lal Sathi v. NachhattarSingh Gill (1982 (3) SCC 487), only a partof the plaint cannot be rejected and if nocause of action is disclosed, the plaint asa whole must be rejected. 14. In Raptakos Brett & Co.Ltd. v. GaneshProperty (1998 (7) SCC 184) it was observedthat the averments in the plaint as a wholehave to be seen to find out whether clause(d) of Rule 11 of Order VII was applicable. 15. There cannot be anycompartmentalization, dissection,segregation and inversions of the languageof various paragraphs in the plaint. If sucha course is adopted it would run counter tothe cardinal canon of interpretationaccording to which a pleading has to be readas a whole to ascertain its true import. Itis not permissible to cull out a sentence ora passage and to read it out of the contextin isolation. Although it is the substanceand not merely the form that has to belooked into, the pleading has to beconstrued as it stands without addition or

subtraction or words or change of itsapparent grammatical sense. The intention ofthe party concerned is to be gatheredprimarily from the tenor and terms of hispleadings taken as a whole. At the same timeit should be borne in mind that no pedanticapproach should be adopted to defeat justiceon hairsplitting technicalities.”8. In Mayar (H.K.) Ltd. and Ors. Vs. Owners andParties, Vessel M. V. Fortune Express & Ors.(supra) dealt with the similar issue and held inparagraph 11 as under:-“11. From the aforesaid, it is apparent thatthe plaint cannot be rejected on the basisof the allegations made by the defendant inhis written statement or in an applicationfor rejection of the plaint. The Court hasto read the entire plaint as a whole to findout whether it discloses a cause of actionand if it does, then the plaint cannot berejected by the Court exercising the powersunder Order VII Rule 11 of the Code.Essentially, whether the plaint discloses acause of action, is a question of fact whichhas to be gathered on the basis of theaverments made in the plaint in its entiretytaking those averments to be correct. Acause of action is a bundle of facts whichare required to be proved for obtainingrelief and for the said purpose, thematerial facts are required to be stated butnot the evidence except in certain caseswhere the pleadings relied on are in regardto misrepresentation, fraud, willfuldefault, undue influence or of the samenature. So long as the plaint discloses somecause of action which requires determinationby the court, mere fact that in the opinionof the Judge the plaintiff may not succeedcannot be a ground for rejection of theplaint. In the present case, the avermentsmade in the plaint, as has been noticed by

us, do disclose the cause of action and,therefore, the High Court has rightly saidthat the powers under Order VII Rule 11 ofthe Code cannot be exercised for rejectionof the suit filed by the plaintiffappellants.”9. Yet in another case of Popat and Kotecha PropertyVs. State Bank of India Staff Association,reported in 2005 (7) SCC 510, the Supreme Courtkeeping in view the principles set out in SopanSukhdeo Sable and Ors. Vs. Assistant CharityCommissioner and Ors. (supra), observed inparagraphs 23 as under:-“23. Rule 11 of Order VII lays down anindependent remedy made available to thedefendant to challenge the maintainabilityof the suit itself, irrespective of hisright to contest the same on merits. Thelaw ostensibly does not contemplate anystage when the objection can be raised, andalso does not say in express terms about thefiling of the written statement. Instead,the word “shall” is used clearly implyingthereby that it casts a duty on the Court toperform its obligation in rejecting theplaint when the same is hit by any of theinfirmities provided in the four Clauses ofRule 11, even without intervention of thedefendant. ...”10.In the light of the afore-stated legal position,let us examine the averments made in the plaintso as to find out whether the plaint disclosesthe cause of action, and whether the suit isbarred under any law as contemplated in Clause(a) and Clause (d) respectively of Rule 11 ofOrder VII. At this juncture, it would be also

apposite to mention that Order VI Rule 2 requiresthat every pleadings shall contain, and containonly a statement in concise form and of materialfacts on which the party pleading relies for hisclaim or defence as the case may be, but not theevidence by which they are to be proved. Thus,though the pleadings must contain a statement inconcise form of material facts, it need notcontain the evidence by which they are to beproved. At this juncture, it would be alsorelevant to mention that Order VII Rule 1 statesas to what particulars should be contained in theplaint, and as per Clause (e) of the said Rule,the plaint must contain the facts constitutingthe cause of action, and when it arose. As perClause (f) thereof, the plaint also must containthe facts showing that the Court hasjurisdiction. The distinction between “materialfacts” and “particulars” has been succinctlydescribed by the Supreme Court in case of SopanSukhdeo Sable and Ors. Vs. Assistant CharityCommissioner and Ors. (supra). Paragraph 20thereof reads as under:-“20. There is distinction between ’materialfacts’ and ’particulars’. The words ’materialfacts’ show that the facts necessary to formulatea complete cause of action must be stated.Omission of a single material fact leads to anincomplete cause of action and the statement orplaint becomes bad. The distinction which hasbeen made between ’material facts’ and’particulars’ was brought by Scott, L.J. in Brucev. Odhams Press Ltd. (1936) 1 KB 697 in thefollowing passage :

The cardinal provision in Rule 4 is that thestatement of claim must state the materialfacts. The word "material" means necessaryfor the purpose of formulating a completecause of action; and if any one "material"statement is omitted, the statement of claimis bad; it is "demurrable" in the oldphraseology, and in the new is liable to be"struck out" under R.S.C. Order XXV, Rule 4(see Philipps v. Philipps ((1878) 4 QBD127)); or "a further and better statement ofclaim" may be ordered under Rule 7. The function of "particulars" under Rule 6is quite different. They are not to be usedin order to fill material gaps in ademurrable statement of claim ­ gaps whichought to have been filled by appropriatestatements of the various material factswhich together constitute the plaintiff’scause of action. The use of particulars isintended to meet a further and quiteseparate requirement of pleading, imposed infairness and justice to the defendant. Theirfunction is to fill in the picture of theplaintiff’s cause of action with informationsufficiently detailed to put the defendanton his guard as to the case he had to meetand to enable him to prepare for trial. The dictum of Scott, L.J. in Bruce case (supra)has been quoted with approval by this Court inSamant N. Balkrishna v. George Fernandez (1969(3) SCC 238), and the distinction between"material facts" and "particulars" was broughtout in the following terms:The word ’material’ shows that the factsnecessary to formulate a complete cause ofaction must be stated. Omission of a singlematerial fact leads to an incomplete causeof action and the statement of claim becomesbad. The function of particulars is topresent as full a picture of the cause ofaction with such further information indetail as to make the opposite party

understand the case he will have to meet.Rule 11 of Order VII lays down an independentremedy made available to the defendant tochallenge the maintainability of the suit itself,irrespective of his right to contest the same onmerits. The law ostensibly does not contemplateat any stage when the objections can be raised,and also does not say in express terms about thefiling of a written statement. Instead, the word’shall’ is used clearly implying thereby that itcasts a duty on the Court to perform itsobligations in rejecting the plaint when the sameis hit by any of the infirmities provided in thefour clauses of Rule 11, even withoutintervention of the defendant. In any event,rejection of the plaint under Rule 11 does notpreclude the plaintiffs from presenting a freshplaint in terms of Rule 13.”11.From the afore-stated provisions contained inOrder VI Rule 2 and Order VII Rule 1 it clearlyemerges that the pleadings i.e. the plaint in theinstant case, must state the material factsconstituting the cause of action and as to whenit arose, and omission of a single material factleads to an incomplete cause of action, and theplaint becomes bad. Such infirmity may attractClause (d) of Rule 11 of Order VII. The word“shall” used in Order VII Rule 11 also cast dutyon the Court to reject the plaint when it is hitby any of the clauses mentioned in Rule 11.12.As stated herein above, the suit has been filedby the respondent – plaintiff seeking variousreliefs inter alia for declaration that theMaster agreement dated 15th October 2007 and thetransactions made therein were illegal and void

ab initio as well as for declaration that theTerm loan agreement dated 13.8.2009 was alsoillegal and void ab initio, and for permanentinjunction restraining the defendant from actingunder and/or in furtherance of the said Masteragreement and the Term loan agreement in anymanner whatsoever, as also for recovery ofRs.54,68,57,468/- paid by the plaintiff to thedefendant pursuant to the said Master agreement.The respondent – plaintiff has also soughttemporary injunction for staying the proceedingsinitiated by the applicant – defendant before theDRT-II, Mumbai and for restraining the defendantfrom initiating fresh proceedings against theplaintiff in the DRT or in any other Courtpursuant to the said Master agreement and theTerm loan agreement.13.Now, if the substance of the pleading of theplaintiff is looked into without any addition orsubtraction, it clearly transpires that the suitis filed by the plaintiff not only with mala fideintention to misuse and abuse the process of law,as will be discussed herein under, the plaintalso does not disclose the material factsconstituting cause of action and the materialfacts as to when it arose, as contemplated inRule 1(e) of Order VII. As held by the SupremeCourt in case of Sopan Sukhdeo Sable and Ors. Vs.Assistant Charity Commissioner and Ors. (supra),the facts necessary to formulate a complete causeof action must be stated in the plaint and

omission of a single material fact would lead toan incomplete cause of action. When Rule 1 ofOrder VII requires the particulars as mentionedtherein to be stated in the plaint, moreparticularly the facts constituting cause ofaction and as to when it arose, the omission tomention such particulars in the plaint would makethe plaint defective leading to the conclusionthat it did not disclose the cause of action.14.When the specific query was raised by the Courtto point out from the averments made in theplaint as to how and when the cause of action wasstated to have arisen, the learned Sr. AdvocateMr.Joshi was not in a position to point out thesame. From the bare reading of the plaint alsoit appears that though the paragraphs in theplaint have been separately numbered with titleslike “the parties, preliminary back ground, thefacts, grounds for ad-interim reliefs,limitation, jurisdiction, valuation, no othersuit, prayers,” etc., there is no paragraphspecifically stating as to which factsconstituted cause of action and as to when suchcause of action, in fact, had arisen for filingthe suit. The respondent – plaintiff has averredinter alia with regard to the execution of theMaster agreement in the year 2007 and executionof the Term loan agreement in the year 2009,however, has remained conveniently silent as towhen such agreements became illegal or void,requiring the plaintiff to file the suit. The

respondent plaintiff has also remained completelysilent as to how and when the cause of action forseeking the reliefs claimed in the suit hadarisen. Such omission to state material facts asregards cause of action is a material omission,making the plaint bad.15.The respondent plaintiff has alleged inter aliathat the plaintiff did not realize that thedefendant had, in gross breach of its fiduciaryduty on the basis of misrepresentations,fraudulently induced the plaintiff to enter intothe transactions under the Master agreement,which resulted in losses to the plaintiff andprofits to the defendants. It is pertinent tonote that, as stated in the plaint itself, theplaintiff was an exporter inter alia of bauxiteand bentonite and was constantly exposed to therisks arising out of the fluctuation in theexchange rate of foreign currency, and therefore,had entered into the Master agreement with thedefendant bank. Hence, it did not lie in themouth of the plaintiff company to state that therespondent - plaintiff was fraudulently inducedby the defendant Bank to enter into suchagreement or transactions under such agreement inquestion. The plaintiff has also stated in theplaint that the plaintiff had gainedRs.55,52,500/- out of the transactions enteredinto with the defendant Bank. Of course it isalso stated that the plaintiff was willing toreturn the said amount gained by it. However, as

stated herein above, the recovery of the amountof Rs.54,68,57,468/-, has been claimed, withoutmentioning as to when and how the said amount waspaid by the plaintiff to the defendant and as towhen they became payable by the defendant. Itcan not be gain-said that for the purpose ofascertaining as to when the period of limitationhad started running for seeking the reliefsclaimed in the suit, such facts would be materialfacts to show cause of action. For seekingdeclarations as regards the Master agreement andthe transactions made thereunder the date ofknowledge about the same having been found to befraudulent would be a material fact required tobe stated in the plaint, which is also absolutelyabsent in the instant case. Mere allegation offraud made in the plaint without stating theparticulars of fraud and misrepresentation wouldnot constitute cause of action. As per thesettled legal position stated herein above, acause of action is a bundle of facts which arerequired to be proved for obtaining the reliefsand for the said purpose, the material facts withregard to misrepresentation, fraud, undueinfluence are required to be stated in the plaintitself.16. On the contrary, it appears that the suitwas filed by the respondent in the Court ofKhambhaliya seeking various reliefs only with aview to frustrate the proceedings initiated bythe defendant Bank in the DRT-II, Mumbai and that

too, after having failed to obtain the desiredreliefs from the Bombay High Court against theorders passed by the DRT-II, Mumbai. Astranspiring from the paragraph Nos.29 to 34 ofthe plaint, it clearly emerges that the defendantBank had filed the original Application Nos.29,30 and 31 of 2011 before the DRT-II, Mumbai forthe recovery of its dues and had also filedinterim applications in the said originalapplications, which were allowed by the saidTribunal directing that the further hearing ofthe original Applications would proceed inaccordance with law and the recovery certificate,if issued, would not be enforced without thepermission of the BIFR, as the plaintiff hadfiled the proceedings before the BIFR under SICA.The BIFR in the said case of the plaintiff hadpassed the order inter alia permitting theapplicant Bank to approach the competent Courtfor crystallization of their dues and to approachthe Board whenever their dues were crystallized.The orders passed by the said DRT were challengedby the plaintiff by filing the writ petition inthe Bombay High Court, which were dismissed bythe order dated 26.11.2012 and thereafter thesuit was filed before the Court at Khambhaliya on24.12.2012 seeking various reliefs, including theinjunction for staying of the proceedingsinitiated by the defendant Bank before the DRTII,Mumbai in O.A. Nos.29 of 2011, 30 of 2011 and31 of 2011. At this juncture, it may be noted

that the Tribunal constituted under the DRT Acthas the jurisdiction, powers and authority toentertain and decide the applications of theBanks and Financial Institutions for recovery ofdebts due to such banks and financialinstitutions as contemplated under Section 17 ofthe DRT Act, and that the jurisdiction of allCourts and authorities, except the Supreme Courtand the High Court, exercising the jurisdictionunder Article 226 and 227 of the Constitution ofIndia, is barred in relation to the mattersspecified in Section 17, as per Section 18 of thesaid Act. In view of the said provisionscontained in Sections 17 and 18 of the DRT Act,the suit before the Civil Court in relation tothe matters required to be decided by the DRT isbarred.17. Though it has been sought to be submitted bythe learned Sr. Advocate Mr.Joshi relying uponthe decision of the Supreme Court in case ofNahar Industrial Enterprises Limited Vs. HongKong and Shanghai Banking Corporation, reportedin (2009) 8 SCC 646 that the jurisdiction of theCivil Court could not be said to be completelybarred under Sections 17 and 18 of the DRT Act,and the reliefs claimed in the suit by therespondent plaintiff could not be granted by theDRT, the said submission has no force. Therelevant observations made by the Supreme Courtmay be reproduced as under:-

“117. The Act, although, was enacted fora specific purpose but having regard to theexclusion of jurisdiction expressly providedfor in Sections 17 and 18 of the Act, it isdifficult to hold that a civil court’sjurisdiction is completely ousted.Indisputably the banks and the financialinstitutions for the purpose of enforcementof their claim for a sum below Rs.10 lakhswould have to file civil suits before thecivil courts. It is only for the claims ofthe banks and the financial institutionsabove the aforementioned sum that they haveto approach the Debt Recovery Tribunal. Itis also without any cavil that the banks andthe financial institutions, keeping in viewthe provisions of Sections 17 and 18 of theAct, are necessarily required to file theirclaim petitions before the Tribunal. Theconverse is not true. Debtors can filetheir claims of set off or counter­claimsonly when a claim application is filed andnot otherwise. Even in a given situation thebanks and/or the financial institutions canask the Tribunal to pass an appropriateorder for getting the claims of set­off orthe counter claims, determined by a civilcourt. The Tribunal is not a high poweredtribunal. It is a one man Tribunal. Unlikesome Special Acts, as for example AndhraPradesh Land Grabbing (Prohibition) Act,1982 it does not contain a deeming provisionthat the Tribunal would be deemed to be acivil court. 118. The liabilities and rights of theparties have not been created under the Act.Only a new forum has been created. The banksand the financial institutions cannotapproach the Tribunal unless the debt hasbecome due. In such a contingency,indisputably a civil suit would lie. Thereis a possibility that the debtor may filepreemptive suits and obtain orders ofinjunction, but the same alone, in ouropinion, by itself cannot be held to be a

ground to completely oust the jurisdictionof the civil court in the teeth of Section 9of the Code. Recourse to the otherprovisions of the Code will have to beresorted to for redressal of his individualgrievances.”18. In the instant case, the applicant Bankhaving already initiated the proceedings underSection 17 of the DRT Act, for crystallizingtheir dues as permitted by the BIFR, the suitfiled by the respondent – plaintiff seekingreliefs in respect of the same subject matterwould be completely barred under Section 18 ofthe said Act. It can not be gainsaid that underSection 17 the Tribunal has powers andjurisdiction to entertain and decide applicationsfrom the banks and financial institutions forrecovery of debts, and under Section 18 no otherCourt or authority has jurisdiction or powers inrelation to the matters specified in Section 17.The learned Sr. Advocate Mr.Joshi would have beenjustified in relying upon the observations madeby the Supreme Court in case of Nahar IndustrialEnterprises Limited Vs. Hong Kong and ShanghaiBanking Corporation (supra), if the bank had notfiled applications under Section 17 for recoveryof debts due to the bank, and if the respondenthad filed peremptory suit for obtaining orders ofinjunction against the applicant Bank. However,when the applicant Bank has filed the proceedingsbefore the DRT, the respondent was expected toclaim set off or counter-claim in respect of the

transactions in question, which were also thesubject matter of the proceedings before the DRT.The respondent could not have asked for theprayers in the suit seeking stay of theproceedings pending before the DRT, Mumbai, whichwas not the Tribunal subordinate to the trialCourt. As rightly submitted by the learned Sr.Advocate Mr.Thakore such a relief of injunctionfor restraining any person from instituting orprosecuting any proceedings in a Court notsubordinate to that from which the injunction issought, would also be barred under Clause (b) ofSection 41 of the Specific Relief Act. Therespondent – plaintiff instead of filing counterclaimor making claim of set off in theproceedings initiated by the applicant Bankbefore the DRT, Mumbai, has filed the suit forrecovery of the amount in respect of the samesubject matter, on which applicant Bank has filedthe proceedings before the DRT, Mumbai, whichwould also be not tenable in view of Clause (h)of Section 41 of the Specific Relief Act. Such avexatious and dishonest litigation deserves to bedismissed right at the threshold.19. As held by Supreme Court in case of T.Arvindam Vs. T. V. Satyapal, reported in (1977)4 SCC 467, followed in N. V. Srinivasa MurthyVs. Mariyamma, reported in (2005) 5 SCC 548, andvarious other cases, if clever drafting hascreated an illusion of a cause of action, theCourt must nip it in the bud at the first

hearing.20. In view of the above, the Court is of theopinion that the plaint, not disclosing the causeof action and even otherwise barred under theprovisions contained in Section 18 of the DRTAct, deserves to be rejected under Clause (a) and(d) of Rule 11 of Order VII. The Court is alsoof the opinion that the suit filed by therespondent is absolutely vexatious and dishonestlitigation, filed with a view to misuse and abusethe process of law to avoid payments to theapplicant Bank. The trial Court having failed todischarge the statutory duty cast upon it underOrder VII Rule 11, and having failed to exercisethe jurisdiction vested in it, the impugned orderpassed by it deserves to be set aside and ishereby set aside. The plaint of the suit beingSpecial Civil Suit No.72 of 2012 is rejectedunder Clause (a) and (d) of Rule 11 of Order VIIof CPC.21. The Civil Revision Application stands allowedaccordingly.(BELA M. TRIVEDI, J.)FURTHER ORDER:

The learned Advocate Mr.S. N. Thakkar for therespondent has requested to stay the operation ofthis order passed by the Court, however, the same isrejected. When the plaint is rejected, there isnothing to be stayed in the matter.(BELA M. TRIVEDI, J.)